(the "about Gmail" page from April 2004)
"Gmail groups all replies with their original message, creating a single conversation or thread. In other email systems, responses appear as separate messages in your inbox, forcing you to wade through all your mail to follow the conversation. In Gmail, replies to replies (and replies to those replies) are displayed in one place, in order, making it easier to understand the context of a message -- or to follow the conversation," explains Gmail's help center.
Some people suggested that Gmail should make threading optional. They assumed that it's pretty easy to disable a feature that's usually offered as a presentation enhancement in email clients. In Gmail, conversations are a core feature and it would be very difficult to disable it without breaking other features.
Last month, Henry Blodget reported that Google intends to make Gmail's conversations optional. "Some Gmail users loathe the Conversations format -- complaining that is confusing and causes them to miss important messages. Google recently handed control over Gmail to a VP named Vic Gundotra. Vic regards Google's prior attitude toward issue as 'tone deafness' and plans to offer another option soon, sources say."
While Gmail's threading doesn't always work properly and it's not always useful, grouping messages and replies in conversations makes it easier to find messages, to read messages and to reply to other messages. Most Gmail features are designed to work with conversations and not with individual messages. For example, you can't label a single message, you can't archive a single message and you can't mark a message as read or unread and you can't detach messages from conversations without deleting them.
If Gmail offers an option to disable conversations, it's likely that Gmail will act like an IMAP client. "IMAP treats messages individually and not as a threaded conversation. If you move a message to an IMAP folder in your mail client, only that message in the conversation will move to that folder. However, in the web interface, the whole conversation will be given the corresponding label. The same rules will apply to labels applied through filters."
If you label a message, Gmail will also label the messages from the conversation even if it will no longer display conversations. I don't think that's a great user experience.
Now that even iPhone's mail client and Hotmail added threading, it's surprising to see that Google decided to make conversations optional and to offer a suboptimal interface that makes Gmail more confusing and difficult to use.
Update: Paul Buchheit, who created Gmail, says that it's not surprised.
It's my opinion that when designing products, especially new products, it's better to have some people [that] will love it than have everyone tolerate it. This generally means aiming for simplicity and philosophical consistency. If you're aiming for "everyone tolerates it", then the approach switches more towards creating a "giant pile of features". I suspect that this change is driven by their desire for greater enterprise adoption (Google apps), where the "more features and checkboxes" approach very often wins out, even if it's ultimately a worse product.